Question

Does the speed of communication via the Internet play have any effect on the duties of principals and agents? How can the problems of anonymity and accountability, in terms of agency law, be dealt with in cyberspace?

Answer 1

Yes, the speed of communication via the Internet certainly does affect the duties of principals and agents. An agent’s duties to a principal consist of performance, notification, loyalty, obedience and accounting. A principal’s duties to an agent consist of compensation, reimbursement and indemnification, cooperation and safe working conditions. Now speed of communication will impact factors like notification. It should be noted that an agent must notify a principal of matters that come to his or her at­tention concerning the subject matter of the agency. The speed of communication can determine the time gap for this notification by the agent and a good speed can ensure real-time communication even if the agent is far away from the principal. Thus the speed of the communication via the Internet can make the agents and principals more duty bound towards each other as information can be transmitted on a real time basis.

The problems of anonymity and accountability, in terms of agency law, can be dealt with in cyberspace. Cyberspace can offer unconditional anonymity to the agents and the principals as well and this can stimulate abusive behavior and violation of duties and responsibilities. In cyberspace agents and principals are free to choose to not disclose their identity but they must be willing to accept the consequences of their actions. Without this the relationship between principal and agent will not be established. In cyberspace the principal-agent usually go for rational anonymity and not absolute anonymity so as to ensure the presence of accountability.